A Registered Retirement Savings Plan (RRSP) is an account, registered with the federal government, that you use to save for retirement. RRSPs have special tax advantages.
How much you can contribute
Anyone who files an income tax return and has earned income can open and contribute to an RRSP. There are limits on how much you can contribute to an RRSP each year.
You can contribute the lower of:
If you are a member of a pension plan, your contribution in pension will reduce the amount you can contribute to your RRSP.
You can carry forward unused contributions
If you don’t have the money to contribute in a year, you can carry forward your RRSP contribution room and use it in
You can transfer certain types of payments to a registered retirement savings plan (RRSP) or from one registered plan to another, such as a registered pension plan (RPP), registered retirement income fund (RRIF), specified pension plan (SPP), a deferred profit sharing plan (DPSP), or a pooled registerd pension plan (PRPP).
You have to transfer certain payments directly. To make sure that these funds are transferred on a tax-deferred basis, you must ask the payer to transfer the funds directly
Where can I Invest
Investments that can be held in an RRSP are called qualified investments. They include:
As of March 22, 2011, you also can’t hold any of the following investments in your RRSP:
If you buy these investments for your RRSP, you will be charged a tax equal to 50% of their fair market value. You may apply for a refund if you dispose of the investment from your RRSP by the end of the year after the year the tax applied.
How long your RRSP can stay open
You must close your RRSP in the year you turn 71. You can withdraw your RRSP savings in cash, convert your RRSP to a annuity or buy an RRIF
Where to open an RRSP account
Home Buyers’ Plan (HBP)
The Home Buyers’ Plan (HBP) is a program that allows you to withdraw funds from your registered retirement savings plans (RRSPs) to buy or build a qualifying home for yourself or for a related person with a disability. You can withdraw up to $25,000 in a calendar year.
Generally, you have to repay all withdrawals to your RRSPs within a period of no more than 15 years. You will have to repay an amount to your RRSPs each year until your HBP balance is zero. If you do not repay the amount due for a year, it will have to be included in your income for that year.